SBTi Corporate Net-Zero Standard 2026: Scope 1, 2, 3 Pathways, BVCM & Validation Guide

2026 is a transition year for science-based targets. On 11 June 2026 the Science Based Targets initiative (SBTi) published Version 2.0 of its Corporate Net-Zero Standard, the first full rewrite since 2021. It takes effect on 31 January 2027, but companies can keep submitting targets under Version 1.3.1 until 31 January 2028. Most sustainability teams therefore need to understand both rulebooks at once.

This guide to the SBTi Corporate Net-Zero Standard 2026 explains the Scope 1, 2 and 3 pathways, the Scope 3 boundary rules, what has happened to beyond value chain mitigation (BVCM), where carbon credits and energy attribute certificates fit, and how validation now works. A worked glidepath shows a 50,000 tCO₂e manufacturer from 2025 to 2035. For a quick visual summary, see the 11-slide SBTi web story, or plot your own numbers in our SBTi Target Pathway Modeler.

• Version 1.3.1 vs Version 2.0
• Category A and Category B companies
• Near-term targets for Scope 1 and 2
• Long-term and net-zero targets
• Scope 3 threshold rules
• From BVCM to ongoing emissions responsibility
• Carbon credits and EACs
• Worked glidepath: 50,000 tCO2e firm
• Validation, assurance and progress reporting
• Common mistakes
• Checklist
• FAQs

Version 1.3.1 vs Version 2.0: which rules apply in 2026?

The numbers most people associate with SBTi come from Version 1: a minimum 4.2% annual linear cut in Scope 1 and 2 emissions for 1.5°C-aligned near-term targets, a Scope 3 target when Scope 3 is at least 40% of the footprint, 67% Scope 3 coverage in the near term, and at least a 90% cut by 2050. These remain the live rules in Corporate Net-Zero Standard V1.3.1, which took effect on 14 April 2026.

Version 2.0 keeps the destination, net-zero by 2050 at the latest, but changes the route. According to SBTi’s Main Changes Document, 42% of its sections are entirely new. It was approved by the Technical Council on 8 May 2026 and adopted by the Board of Trustees on 21 May 2026, after public consultations in 2025.

The practical rule is simple. If you are submitting targets before the end of January 2028, you can choose V1.3.1 and the familiar percentages apply. Companies that already have 2030 targets keep them, and set their next-cycle targets (2030–2035) under V2.0 from 2028. Some V2.0 features, such as company categories and progress assessment, are already available to V1 users.

Category A and Category B companies

Version 2.0 replaces the separate SME route with two company categories. A company is Category A if it has net turnover of at least €450 million or at least 1,000 full-time employees, in any country. In high-income countries, a company is also Category A if its combined Scope 1 and 2 emissions are at least 10,000 tCO₂e, or if it meets two of three tests: a balance sheet of at least €25 million, turnover of at least €50 million, or at least 250 employees. Everyone else is Category B.

The category decides the workload. Category A companies must set Scope 3 targets, identify emissions-intensive activities, obtain limited third-party assurance of inventories and target metrics, and support carbon removals from 2035. For Category B these elements are optional or lighter. Note that the emissions test catches many mid-sized manufacturers: the example company in this guide, with 20,000 t of Scope 1 and 2 emissions, would be Category A in a high-income country even with modest turnover.

Near-term targets for Scope 1 and Scope 2

Under Version 1.3.1

Near-term targets run five to ten years from the date of submission and must cover at least 95% of company-wide Scope 1 and 2 emissions. For the absolute contraction approach, the minimum 1.5°C ambition is a 4.2% linear reduction per year from the base year. Linear means the percentage applies to base-year emissions each year, so a ten-year target equals a 42% cut, not a compounding decline. Sector-specific pathways, such as those for power or cement, may require different rates.

Under Version 2.0

V2.0 splits the combined target in two. A Scope 1 target must cover 100% of direct emissions using an absolute reduction, a sector intensity, or a new asset-transition option for long-lived capital stock. A separate Scope 2 target must cover 100% of purchased electricity, heat, steam and cooling, either as an emissions target based only on the location-based inventory or as an alignment target to reach 100% low-carbon electricity. Category A companies whose electricity demand is growing by more than 20% a year must set a Scope 2 emissions target. The V2.0 Criteria describe the absolute option as a linear trajectory to residual levels by 2050, and near-term targets now cover a fixed five-year cycle.

Long-term and net-zero targets

Under V1.3.1, every net-zero target needs a long-term target covering at least 95% of Scope 1 and 2 emissions and 90% of Scope 3, reached by 2050 at the latest. For most companies the cross-sector pathway implies a cut of at least 90% from the base year. Any remaining residual emissions must be neutralised with permanent carbon removals; a company cannot claim net-zero until both conditions are met.

V2.0 is more flexible on long-term targets but stricter on net-zero claims. Long-term Scope 1 targets are required only when the near-term Scope 1 target uses intensity or asset transition; long-term Scope 2 and Scope 3 targets are optional. A company that chooses to set a net-zero target, however, must cover 100% of Scope 1, 2 and 3 emissions and neutralise all residual emissions. SBTi also recommends that companies in high-income countries aim for net-zero well before 2050.

Scope 3 threshold rules: from 40%/67% to the 5% test

Scope 3 is usually the largest part of a footprint and the hardest to control, which is why the rules here changed most.

• V1.3.1 trigger and coverage: when Scope 3 is 40% or more of total Scope 1, 2 and 3 emissions, near-term targets must collectively cover at least 67% of Scope 3. Long-term targets must cover 90%.
• V1.3.1 ambition: near-term Scope 3 reduction targets must be at least well-below 2°C aligned, a 2.5% linear annual cut, or take the form of supplier or customer engagement targets.
• V2.0 significance test: Category A companies must cover every Scope 3 category that represents 5% or more of categories 1–14, based on the physical inventory. Optional exclusions apply in categories 3, 7, 8, 9, 10 and 14 where the company cannot practically influence outcomes, and each must be justified.
• V2.0 metrics: engagement targets become supplier and customer alignment pathways, and new volume, product-use and end-of-life methods are added. The 7% economic and physical intensity methods are removed. Category A companies must also report emissions-intensive activities that make up 5% or more of Scope 3.

From BVCM to ongoing emissions responsibility

Version 1 strongly encourages beyond value chain mitigation: investment in climate action outside the company’s value chain, such as funding verified emission reductions or removals, alongside its own targets. It was a recommendation, not a requirement, and it never counted towards targets.

Version 2.0 turns this into an ongoing emissions responsibility (OER) framework. A voluntary recognition program rewards companies that take responsibility for the emissions they still release on the way to net-zero, through climate contributions such as reductions, removals, mitigation finance and adaptation support. The levels set out a carbon price per tonne for the first time:

The bigger change is mandatory. From 2035, Category A companies must support eligible carbon removals equal to 1% of ongoing Scope 1, 2 and 3 emissions, rising linearly to 100% by their net-zero year and no later than 2050. At least 10% of that volume must come from long-lived removals for long-lived gases, also rising to 100%. SBTi says it will review this requirement in Version 3.

Carbon credits and EACs: where the 2026 debate landed

The use of carbon credits and energy attribute certificates (EACs) was the most contested part of the revision. Some companies and market groups argued that high-quality credits should count against Scope 3 targets, where direct control is limited. Many scientists and NGOs argued that this would weaken targets and reward offsetting over real decarbonisation.

V2.0 takes a middle path through an implementation hierarchy. Companies must first take activity-level action, such as cutting fuel use or changing suppliers. Only where that is not feasible may they act within shared systems, called activity pools, such as an electricity grid or a logistics network, and then at sector level when structural constraints are documented. Market instruments and certificates are recognised only if they meet integrity criteria: accurate emissions attributes, volume matching, transparent tracking registries and no double counting.

• Carbon offset credits cannot be used to reduce the physical inventory. Some project-based actions and certificates in activity pools or at sector level may count toward targets under the hierarchy, but they are reported separately from the inventory. Other credits belong in the OER program or, for removals, in neutralisation.
• Electricity EACs, including power purchase agreements, supplier contracts and unbundled certificates, can support low-carbon electricity targets if they come from the same deliverability region, with a 15-year limit on generator age.
• Hourly matching is voluntary. Companies using 10 GWh or more in a region must disclose their hourly-matched share; recognition thresholds are 50% until 2030, 75% until 2035 and 90% from 2035.
• SBTi intends to develop further criteria and may recognise programs and instruments that meet them, so expect more guidance in late 2026 and 2027.

Worked glidepath: a 50,000 tCO2e manufacturer

Consider a mid-sized manufacturer with base-year (2025) emissions of 50,000 tCO₂e: 12,000 t Scope 1, 8,000 t Scope 2 and 30,000 t Scope 3. Scope 3 is 60% of the total, so under V1.3.1 a Scope 3 target is required. Purchased goods (category 1) and use of sold products (category 11) together make up 75% of Scope 3, enough to clear the 67% minimum.

By 2035 Scope 1 and 2 emissions fall to 11,600 t, a 42% cut, and total emissions to 35,975 t, 28.0% below the base year. Choosing the more ambitious 1.5°C rate of 4.2% for the covered Scope 3 categories would lower them to 13,050 t and total emissions to 32,150 t. To reach the long-term target, total emissions must fall to roughly 5,000 t by 2050, with the remainder neutralised by permanent removals.

Under V2.0 the same company would set separate Scope 1 and Scope 2 targets on five-year target cycles, renewed after each end-of-cycle assessment, and its near-term Scope 3 boundary would grow to 91% because upstream transport and end-of-life each exceed 5%. If it follows the post-2035 requirement, it would need to support about 360 t of removals in 2035, including at least 36 t of long-lived removals. You can test these assumptions with your own data in the SBTi Target Pathway Modeler.

Validation, assurance and progress reporting

Under V1, companies submit targets for validation, report progress annually and review targets at least every five years. V2.0 formalises a full cycle. Targets are validated by an SBTi-recognised validation body (SBTi’s own validation service is hosted by its subsidiary, SBTi Services), followed by annual progress reporting and an end-of-cycle assessment when the five-year target period ends.

• Governance: targets must be approved at the highest level of the company, backed by a transition plan that is reviewed at least every five years.
• Base year: V2.0 uses the most recent full year of data as the target base year and requires recalculation when changes shift any scope by 5% or more.
• Assurance: Category A companies need limited third-party assurance of their inventories, target metrics and end-of-cycle progress.
• Data: a complete, location- and market-based GHG inventory is the starting point. Our GHG Emissions Engine helps build one, and our CSRD double materiality guide shows how SBTi targets feed ESRS E1 disclosures.

Common SBTi target-setting mistakes

• Compounding instead of linear. 4.2% a year means 4.2% of base-year emissions each year. A compounding calculation understates the required cut.
• Mixing versions. Combining a V1 combined Scope 1+2 target with V2 Scope 3 rules is not allowed; pick one standard per submission.
• Counting credits as reductions. Offsets and avoided emissions cannot reduce the physical inventory; any eligible instruments must be reported separately.
• Ignoring growth. Absolute targets do not adjust for business growth, so a fast-growing company may need deeper efficiency gains than the headline rate suggests.
• Weak supplier data. Spend-based Scope 3 estimates make it hard to show real progress; plan supplier-specific data collection from year one.

Checklist for 2026–2027 target setting

1. Decide your version: submit under V1.3.1 before 31 January 2028, or prepare for V2.0 from Q1 2027.
2. Determine your category using turnover, employees, Scope 1 and 2 emissions and geography.
3. Build a complete inventory covering all relevant Scope 3 categories, and test the 40% and 5% thresholds.
4. Model the pathway for Scope 1, 2 and 3 to the near-term year and to 2050.
5. Secure board approval and write a transition plan with capital expenditure linked to targets.
6. Plan for removals: estimate residual emissions and, for Category A, the post-2035 removals requirement.
7. Set up annual progress reporting and, if you are Category A, line up an assurance provider.

Carbon pricing is the other side of the same transition: see our EU CBAM compliance guide and California SB 253 guide for disclosure and border-cost rules that use the same emissions data.

Frequently asked questions

What is the SBTi Corporate Net-Zero Standard 2026 update?

It is Version 2.0 of the Corporate Net-Zero Standard, published on 11 June 2026 and in effect from 31 January 2027. It adds company categories, separate Scope 1 and Scope 2 targets, a 5% significance rule for Scope 3, an implementation hierarchy for market instruments, and an ongoing emissions responsibility framework.

Can companies still use the 4.2% per year pathway?

Yes. Companies can submit targets under Version 1.3.1 and the Near-Term Criteria V5.3 until 31 January 2028. Under those rules, 1.5 degree-aligned near-term targets need at least a 4.2% linear annual reduction in Scope 1 and 2 emissions.

When is a Scope 3 target required?

Under Version 1.3.1, a near-term Scope 3 target covering at least 67% of Scope 3 is required when Scope 3 is 40% or more of total emissions. Under Version 2.0, Category A companies must cover every Scope 3 category that is 5% or more of Scope 3; Scope 3 targets are optional for Category B.

Can carbon credits count towards SBTi targets?

Not as reductions in the emissions inventory. Under Version 1.3.1, credits can only support beyond value chain mitigation or neutralise residual emissions. Version 2.0 allows some certificates and project-based actions to count toward targets under its implementation hierarchy, reported separately, while other credits sit in the ongoing emissions responsibility program.

What replaces beyond value chain mitigation in Version 2.0?

Version 2.0 turns the beyond value chain mitigation recommendation into an optional ongoing emissions responsibility recognition program with Engaged, Advanced and Leadership levels, plus a requirement for Category A companies to support carbon removals from 2035.

Sources

• SBTi, Corporate Net-Zero Standard V2.0 Criteria (June 2026)
• SBTi, Corporate Net-Zero Standard V2.0 Main Changes Document (June 2026)
• SBTi, Corporate Net-Zero Standard V1.3.1 (April 2026)
• SBTi, Corporate Near-Term Criteria V5.3; SBTi frequently asked questions on the transition to V2.0.

This guide is for information only and is not validation, legal or investment advice. Always check the current SBTi criteria and any applicable sector standard before submitting targets.